Remember my prediction last week about a bullish breakout if a triple bottom formed in Brent oil? Well it happened exactly as predicted.
Brent crude oil 4H chart
Also the same pattern have formed in Gold and Silver. So now all of them are in a rush upwards. Look here at the small charts.
Silver 4H chart
I am riding the upwards push in Brent (via oil certificates and in the oil producers PA Resources and Malka Oil on the OMX Exchange) and Silver (via certificates). I actually think the silver push will go the highest. I predict resistance for Brent at $70 that will stop the push (and then slow down at least for a while). For silver I see first resistance at $14.40. If that breaks the next level is the current yearly high in the range of $15.50 - $16.
As for Gold I’m not trading it right now, but we will probably see another attempt at breaking the $1000 barrier. If it does, I will buy. But before that there probably is resistance at $960.
We’ll have to keep watching those charts. These commodities are very sensitive to the predictions for the general recession, and the market manipulation in them are enormous. The prices does in no way reflect the actual supply and demand.
It seems that the true resistance for brent oil curde was $60. The market tried to push throu twice, but quickly got back over forming a “double bottom”, a pattern associated with a bullish break out. Well it seems the pattern proved correct. The price is right now above $61.50. Very interesting.
Silver is still in a down trend but I expect it to hit restistance soon too, so keep your eyes open.
Update: Seems the market didn’t listen to me (again). The next bar closed at 59,80. Well under the 20-SMA again and testing resistance again. Well see what happens. If it bounces that is a tripple bottom, which is very bullish. If if breaks, who knows where the bottom is. I’ll just wait and see. As of before I hold no positions in Oil at the moment.
Just a small update on the Gold, Silver and Oil sectors.
Gold Daily chart with 20-SMA.
Silver Daily chart with 20-SMA.
Brent (Oil) Daily chart with 20-SMA.
So, where do you think these commodities are heading? Yeah I think so too. You don’t even have to use any special indicators for this one. It is however interesting to spot support levels. I am guesstimating support for gold at $870, it held up there in April. For silver I am seeing $12 as S1 and crude is first $58 and second $50 if it breaks.
So what can stop this downward trend? Well rapport season starts now and there is the G8 meeting starting today. OPEC has stated that they think $70-$80 is ‘fair’ for crude, and I guess they will cut production if we stay at levels downwards of $60. As for silver it is highly connected to the recession and the bear market rally we have been experiencing. I don’t see it recovering. Gold is harder to predict, as it is very closely tied with the USD (which I have been shorting for ever now, but has been getting stronger…).
Back in May I bought a small post in Malka Oil, a Russian oil dwarf traded at the OMX Exchange in Stockholm. The company have been going through some very very serious trouble in the wake of the credit crisis and semi-crash of the oil price. Once traded in the range of 4-5 SEK this company was on the brink of bankruptcy and I got in at 0.12 SEK (the lowest traded price was 0.04 in march, but then it was a real lottery ticket). So what has happened since the low point? Well, there’s been private security (mercenaries) occupying the oil field (!) and other exciting actions like that. The company’s pipe line is still blocked by a disgruntled previous vice chairman that claims Malka Oil ow his construction company millions. Legally this conflict was closed last Monday by a Russian court, that ruled in favor of Malka Oil. Since then the price of the stock has risen to a high of 0.23 SEK and closed this Friday at 0.20 SEK.
So, what will happen in Malka Oil now? Well today there’s a share holder meeting (it was postponed to wait for the Russian court ruling). It is expected that there will be much information released about the company’s state, and it is expected that it is good news. So, I think we will see another nice push after the meeting. The proven oil reserves are really cheap here. If they can get production started again (after the mercenaries were there) and is able to use the pipeline I think the market will recognize this with a fair price based on the current oil price, which is in a upwards movement in itself.
That said I only have a small post in the company myself. Don’t put your life savings into it 
In general I think we will see a price of 75 USD during the summer, just as OPEC wanted.
Gold and silver got hit last Friday after a very nice two weeks. I which I had been more active and got out, but I didn’t. I will sell off half my positions today because I don’t see a clear trend right now, just as I don’t at the exchanges in general. Summer is here…
I’ve been quite inactive this week, I think it’s been hard to see a clear trend at the exchanges, I still think we are going to be trending downwards from here until the autumn, but it is not shown in the prices decisively as of yet. So I turned my head to the commodities and bought gold, silver and oil, as I saw a trend there still. I used the 2X certificates by SHB offered at OMX, but any vehicle is good I think. As of earlier I have the GLD ETF at NYSE in the portfolio for example (that when considering this weeks weakening of the SEK against the USD has done very well). So far I’ve been right on the money, with BULL GULD up 5.6%, BULL OLJA up 15.86% and BULL SILVER up 12.98% (as of this writing).
I’ve written about silver before and still my analysis is the same, it is in for higher prices this year. The reasons are mainly two, the weakening of the dollar and increased demand versus availability (stores and production is down). The Gold market is driven more by the uncertainty in the worlds currencies, but should not be underestimated. Lastly oil is going up from a very very historically low level this winter. OPEC has cut it’s production in order for it to go up, so why not play along?
As for the broader commodity ETF’s some are getting close to their 200-SMA’s. DBA (Agriculture) has already crossed it. DBB (Base Metals) is just shy of it, but has been trending in range for a month. DBC (General commodities Index) looks better, it is closing in on the 200-SMA with a upwards trend. DBE (Energy) is still quite a bit from the 200 day moving average, but it is in a strong upwards move (most certanly because of the Oil price of course). All in all I think that there will be buy signals in these ETF’s in a month or two.
